Our blog highlights Canadian Business Financing via receivable finance , equipment finance, working capital financing, asset based lending, franchise finance and tax credit monetization via SRED and Film Tax Credits.
Our goal is to educate and assist Canadian business with their financing needs .
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Welcome to 7 Park Avenue Financial
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WELCOME !

Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.

SRED Tax credit financing, even just the concept of SR ED loans to monetize your R&D capital investment can be a confusing scenario for Canadian businesses who take advantage of the most popular of Govt refund credits. So we're officially forgiving those who don't know the basics - and we'll fix that with some solid tips and info. Let's dig in.

Looking for a breath of fresh air in the SR&ED world? When it comes to financing and monetizing your claim 2 simple facts remain and we'll simplify that as follows:
1. If you have a sred claim it’s financeable for cash and working capital now

2.To finance a claim you need to have filed a claim, but not always!!

Your ability to monetize or cash flow a claim is in fact a superior way of generating additional working capital and cash flow now based on the value of your filing. We will add one technical point here, in that claims are generally financed at 70% LTV. LTV means ' loan to value ‘, so we are simply saying that for every one hundred thousand dollars of sred claim filing you can generate seventy thousand dollars via a short term sred bridge loan .

We can expand on that point a bit to ensure you are well informed. After filing a claim it is clear you are in a ‘waiting mode ' for your claim to be analyzed, potentially audited, and then of course waiting for the proverbial government cheque - shall we say ' it's in the mail ‘!

With Ottawa backing your non repayable cheque you of course have the assurance funds will come, but you just don't know when!

We recommend that if you have filed a claim that you investigate the ability to finance that claim now.

Why wouldn't you consider a financing option to accelerate cash flow and start using those funds now?

Uses of funds under SR&ED financing are totally within your control. We see clients utilize SR&ED loans to further invest in even more R&D, i.e. next years claim! or you can choose to reduce payables, invest in additional equipment or business assets, etc.

In a small handful of cases we meet with firms who have a tax liability to Ottawa or the province re source deductions, HST, etc. If you work with a trusted, credible, and experienced Sr&Ed finance advisor you can structure your financing to ensure that you're past due remittances are taken care of during the sred financing process. No firm wants to be in the governments bad books re past due government super priority issues.

The actual SR&ED financing process should be treated by yourself as any other business financing - we try and actually make the case its easier in some cases, because the actual asset behind the sred loan is the sred claim itself, so even if you think your firm might not qualify for financing for other forms of traditional borrowing your probably qualify for the sred - why?? Because you have a sred claim as an asset that's verifiable!

Given that billions of dollars are refunded under the SR&ED refundable tax credit you want to ensure you're getting your share - no argument about that. SR&ED loans simply speed up that process. Yes you can wait for funds, which may take a couple months or the better part of a year - if you can’t wait consider financing your Sr&Ed claim via a short term sred loan which is collateralized against your filing.

We strongly recommend you have a professional filing prepared, by your accountant or sred consultant (there are many) - this will significantly positively impact your ability to finance your claim.

Looking for a great cash flow and working capital strategy around that R&D capital investment - Monetize your tax credit. No new debt is on your balance sheet, as it is offset by your sred asset that is in fact a monetizable account receivable. Seek out and speak to a trusted credible and experienced Canadian business financing advisor who can assist you with your claim financing.

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

You have choices in sources of working capital finance and in business credit solutions.

It is all about understanding the problem and knowing where to go for the solution, so let's look at those two key issues. Understanding the problem is not something you have to read about, as a business owner and financial manager in Canada you live the capital 'crunch' or 'challenge' every day.

Working capital is best understood as your operating capital, and you have investments in receivables, inventory, that's where your investment currently lies, and your goal is to monetize those assets in the best manner possible.

The textbook definition doesn't really help us out - our accountants and analysts tell us to go to the balance sheet, subtract current liabilities from current assets, and, voila! That's working capital!

One of the biggest contradictions that you need to understand is the issues of assets, profit, liquidity and turnover. Once you have a handle of those the concept of working capital and, more importantly, the solutions start making more sense.

We hate those textbook definitions we referred to, but we will agree that the calculation we shared needs to be positive - you do need more inventory and receivables combined as measured against payables and other short term liabilities. How you manage those short term assets of A/R and inventory is the challenge.

Many business owners quickly realize that one of their liabilities, i.e. payables, is actually a large asset in measuring capital and managing it. That is because if you can continue to convert inventory into A/R into cash, and slow down payables you are achieving working capital progress.

Is there a perfect way to measure your working capital needs and progress? One of those methods is to check into the 'cash conversion cycle '- It's a tool you can use to measure how low a dollar takes to flow through your company. It simply takes your inventory and receivable days outstanding, subtracts your payables days outstanding, and there is your final number. It's a great long tool to understand your progress over long periods of time.

In order to achieve solid cash flow you need to increase turnover - that can be done by accelerating cash flow by borrowing against receivables, or selling receivables via a factoring process.

Your working capital solutions in Canada are limited, but they are very focused and real. Your can increase cash flow today with no ones assistance simply by accelerating turnover of your assets such as receivables and inventory. If you feel your challenge is more of a long term nature a term loan (if larger these loans are called subordinated debt) is the solution.

You can also generate unlimited capital by entering into an asset based lending or facility with a non bank finance firm. Don't forget that term loans for working capital add debt and obligations to your balance sheet, so we often suggest to clients that the best solution is in fact monetizing your assets, not borrowing more - that where asset based lines of credit work best.

So whats it all about - it's a case of understanding what it is, looking at how your firm performs in key metric areas of turnover, etc, and then choosing a solution that works best for your firm, whether that is long term in nature, or a bulge type facility that augments your daily cash needs. Speak to a trusted, credible and experience working capital business financing advisor to determine what choice is best for your firm.
Stan Prokop is founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
The company originates business financing for Canadian companies and is a specialist in working capital, cash flow, and asset based financing. In business 6 years the company has completed in excess of 45 Million dollars of financing for Canadian corporations of all size. For information on Canadian business financing and contact details please see:

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.Stan Prokop

Monday, November 28, 2016

Is A Business Credit Line Mission Critical To Your Business ?

3 Critical Things You Need to Know

OVERVIEW – Information on working capital operating facilities in Canada . Does an asset based credit line work for your business ?

Can an asset based credit line turn a business problem into a solution? We think it can , so when working capital lines are a need in your firm it's important to understand that revolving asset facilities can be a ' mission critical 'part of your firms success in growth , profits, and cash flow . Let's dig in.

When working capital starts to become a critical day to day challenge Canadian business owners and financial managers must consider all business financing options.

Asset based credit lines are increasingly popular, and... guess what ... often misunderstood! This type of financing comes under the broad category of asset based lending and the simple definition of such a facility is the ability of your firm to maintain an operating line of credit, outside of a bank relationship.

Here are 3 critical factors that you need to know and understand the true benefits of 'asset finance credit lines ‘:

1. What assets are financed under this facility and how does this differ from a bank facility

2. How does the facility Work on a day to day basis

3. What are the fees involved and how much can we get from a total working capital perspective?

Let's start with our first critical factor - exactly what is this type of facility? An asset based line of credit in its true sense, and in the context we are discussing is a working capital revolving credit. The assets that are secured under this facility are accounts receivable, inventory, and in many cases equipment and actually sometimes real estate.

We poised the question - how does this facility work when we compare it to a charted bank line of credit. In actuality it is quite similar, with the main difference being that 99% of the time you can extract additional borrowing power out of the assets we mentioned.

Banks are the low cost and most flexible and common business credit line - but they focus on:
Balance sheets
Personal owner’s credit
Ratios
Covenants
Guarantees/Outside collateral availability

Asset based lines of credit in fact tend to eliminate many of those considerations, and focus only on one key point - the assets! Because that is the case receivables and inventory are margined up, via traditional borrowing based certificates, to a much higher level than might otherwise be maintained with traditional financing. When you factor in working capital that is secured by equipment, you can quickly see that your borrowing capacity has increased significantly.

Point # 2 - How does it work?!

Similar to a bank revolving line of credit your borrowing capacity in an asset based line of credit is simply the drawing down, on a weekly, monthly, or in fact anytime basis, of your total borrowing capacity based on your reporting of current A/R, inventory and equipment levels.

Asset based lines of credit typically cost more than the bank- In Canada these facilities are priced from 7-9% per annum to 1-2% a month .

What determines this huge spread in pricing? It is the overall asset quality and size of the transaction , as well as the ability of many asset based lenders to do transaction that would normally not be anywhere near to be considered by a bank, and as such, the risk is higher, so pricing is higher . It is as simple as that. In terms of what amounts you can borrow, you can assume 90% of A/R, a 40-60%+ range on inventory, and a similar amount for equipment. (Equipment would often be subject to a market value appraisal).

Does your firm need more working capital? Are you self financing now. Are you unable to access traditional financing, or, more commonly, does traditional financing seem unable to meet your growth or unique situation needs? If so, speak to a trusted, credible, and experienced Canadian business financing advisor with asset based lending expertise.

Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

OVERVIEW – Information on business financing solutions in Canada . Numerous working capital financing and cash flow challenges can be solved with the right funding solution - Here's why and how!

Business loans in Canada, for some business owners / financial mgrs must seem ' spectacularly appalling' sometimes. How then can your company reverse that ' leap backward' feeling when it comes to working capital financing and cash flow solutions? We've got some answers, so let's dig in.

When sourcing business loans two key factors come into play -
Is the need for additional financing?

Is a re-financing strategy in fact required?

There's no question the current borrowing environment makes it challenging for business owners and financial managers to often access the right amount of capital they need. No secret there.

When we talk to client's discussion tends to revolve around what type of financing they require, and as a business owner you should understand the options and benefits that come from various types of working capital and debt financing.

A good way to address the issue is to simply focus on why you feel you need the additional capital. Reasons might be as follows:
Refinancing existing debt

Leasing new equipment

Monetize current assets such as A/R and inventory into a permanent business credit line

You need all the help you can get in assessing those needs and the benefits that arise from them - as a result we recommend you work with a credible, trusted, and experienced advisor in business finance.

Ever wondered what category you're in?!

Category 1 - You have a bank relationship but can't access the true amount of financing you need

We encourage customers to think around the terms traditional financing and nontraditional financing. If you are thinking of exploring traditional financing with a new or existing bank then you should anticipate, in our experience, at least a 1-2 month timeframe.

This might not be suitable for your timing purposes if you have increased payables to address, or new orders and contracts which require a buildup in A/R and inventory.

If timing and increased working capital are your priority you should consider an interim solution to the always long term problem of business financing - that solution might be a working capital facility from a private finance firm, one that provides you full margining of your receivables and inventory .Typical entry advances for a/r and inventory are 90% and 40% respectively, and if you work with the right partner that specializes in inventory financing then you can even enhance those ratios . All that simply means is more working capital!

One point of confusion that we like to clarify with clients is that the government small business loan program finances only equipment, leaseholds, and real estate, i.e. hard assets - as such this program should not be confused with a true working capital solution .

So what is our bottom line for small business loans (unsecured) and working capital financing .It is simply that you must realistically recognized the commercial lending landscape has changed:
Traditional financing is harder to access!

Collateral requirements and guarantees are at a higher bar for approval

There are alternative methods to securing working capital financing - these might come at a higher cost, but should in most cases provide you with the cash flow you need to effectively run and grow your business. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding requirements.

Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Thursday, November 24, 2016

OVERVIEW – Information on accounts receivable financing in Canada . Factoring and other asset based lending solutions provide the cash flow you need to run and grow your business and profits

Cash flow solutions , thankfully, are a lot more available and well used in today's often challenging business financing environment. Factoring, and other versions of the accounts receivable financing strategy could well be the ultimate solution to working capital needs. Let's dig in.

Almost all business owners / financial mgrs looking for SME Commercial Finance solutions are feeling the pain of slow payments from customers, including of course those large well known and powerful corporations that can wield accounts payable deferral power! Payments norms seem to be 60-120 days in many cases!

The irony is of course that many customers still post 30 day terms on their invoices and purchase order acknowledgements from their client base. No secret that slow payables = better cash flow.

We should not fail to mention of course that there is one very obvious 'non - financial 'solution for your company, and it does not even involve additional financing effort. It is simply to enforce collections more strongly and reduce what is known as your 'days sales outstanding 'to a more manageable level. Any major dent you can put in your 'D S O 'will improve working capital and cash flow.

So we have discussed why you want to factor receivables and to some extent what your non - financial solutions are. But let's just make sure we understand what we are talking about. When you are working under a bank facility your receivables are collateralized or pledged as a security for an overdraft

. That's the best simple way we have of explaining to clients what factoring is not! What it is, though, is the sale of your invoices, on a daily, weekly, or monthly basis (the flexibility is your choice), thereby increasing your advance rates on those receivables to the 80-90% range depending on the type of facility you have structured.
More cash flow and more immediate cash flow is the most obvious solution to factoring and accounts receivable financing.

We spoke of the price you have to pay in factoring receivables. When we sit down with clients we advise them there is a real price, i.e. the financing or invoice discounting cost, but, more apparently, the major change in the way day to day business changes from a paper flow and customer interaction basis.

If you negotiate the wrong type of facility you might find yourself in the same situation that many of our clients have found when they come to us with financing woes, which is simply that they feel that in spite of the significant cash improvement they in fact feel that their factor firm partner is running their business.

Many business owners who know little about factoring seem to know one thing, that it can be viewed as intrusive by their customers. You can eliminate that 'intrusiveness 'by ensuring you have the right type of facility, one that is priced right, has straightforward terms, and works on a day to day basis for you and your customers.

Have you investigated non bank asset based lines of credit and Confidential Receivable Financing? The best factor funding facility in fact, we feel, is the one that allows you to bill and collect your own receivables, while at the same time reaping all the benefits of accounts receivable discounting as factoring funding is also known.

Determine if you can achieve self financing status via the more prompt collection of receivables

Plan B?! If financing is in fact needed consider factoring financing as a working capital strategy.

If you're committed to ' escaping ' from cash flow challenge hell seek out and speak to a trusted, credible and experienced Canadian Business Financing Advisor who can assist you with your cash flow needs.

Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.Stan Prokop

Businesses that are growing require sources of capital. The capital in a company of course comes from the owner or borrowed funds. Generally speaking business owners prefer to borrow rather than sell equity in the company, as that sale of equity dilutes the ownership position, i.e. they own less of the pie! New equity can come from friends and family, venture capital firms, and angel investors. These parties are looking for good management, integrity, owner financial stake, and growth potential.

However, in the current difficult financial environment many lenders are in fact insisting that business owners put more of their own money into the company. There is never an easy answer when it comes to the debt or equity question.

When businesses borrow funds there is a cost to that capital - as interest on that debt reduces over-all profits. New equity in the company of course does not reduce those earnings, however the profits are distributed more widely and the earnings are proportionately reduced.

Borrowing funds of course comes with risk, as those loans must be repaid. Business owners sometimes get caught in the trap of financing long term projects with short term money - they are therefore at the mercy of having to always roll over that debt, and potentially also seeing rates go up, sometimes dramatically. Also, a business can carry only so much debt, at which point cash flow becomes a potential problem if the company is over leveraged.

Currently rates are very low for businesses that have access to capital. Therefore in many cases it might make sense to lock into longer term loans in the current attractive rate environment.

When the business owner has made the decision to purse business loans the old Boy Scout model works very well - BE PREPARED !

Business owners that do their homework will usually be successful. Lets not forget the banks and finance firms are actually in business to loan funds. Naturally collateral, or additional collateral certainly improves the chances of debt financing success and loan approval.

Debt and equity financing as a sources of capital should be used for the right reasons - expansion, seasonality of business, increased inventory and working capital that will increase sales. Funds that need to address business inadequacies such as poor management, financial losses, falling sales, etc are very difficult to come by!

In summary, business owners should carefully consider the positive and negative effects of additional debt or equity capital. Once they have made an informed decision, either on their own or with a trusted business advisor they should consider the cost of that capital and how it is best achieved.

Stan Prokop is the owner of 7 Park Avenue Financial. The firm originates business financing for Canadian firms, and is a specialist in business financing.
http://www.7parkavenuefinancial.com/Home_page.html

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.